Facebook IPO: Boom or bubble?

We look at the numbers - and what's missing...

Analysis Is Facebook hugely overvalued or a solid business with some reliable growth ahead of it? A great deal of both.

The reason the Facebook flotation is different from yourfunny.co.ck, or anything conceived by a Shoreditch "leisure startup", is that it already has a large and devoted audience. When you can reliably draw a large crowd every day, you should be able to make some money. This is the one constant between the medieval minstrel and the modern media company - it's the same business proposition.

And this is what makes Facebook special and, incidentally, quite different to Google. The Chocolate Factory was an integral part of web life and internet commerce when it floated in 2004, but despite being a global brand, it was a website that people only ever left for other destinations. (Google only realised the importance of this quite belatedly.)

By contrast, Facebook is very sticky, at least for a lot of people. Facebook's S-1 registration statement says it has 845m active users and 483m active daily users. A more important statistic offered is that in December 360m checked in six days out of seven.

Now, I'd be wary of inferring too much from any communication statistic offered for a time period that includes Christmas. It tends to inflate "connection metrics"; many people communicate just once a year and it'll be in December. If every month was like December, it would be Hallmark Cards who'd have the Facebook-sized evaluation this morning. But that's still a pretty decent number.

He also had a cunning plan.
Does Mark Zuckerberg?

So think of Facebook as a new TV channel, with some Facebook users already spending far more time on the site than they do watching TV. But how much time - and what kind of TV channel is Facebook?

As one analyst has noted, the S-1 lacks even the most basic information on how the usage figures were worked out. And where it appears, it's obfuscated. "On average, users in the aggregate spent more than 9.7 billion minutes per day on Facebook on personal computers during December 2011," is all we're told. So we must to do the maths for ourselves.

This is odd.

If you ask us nicely here at El Reg, our commercial department will send you a lovely pack telling you how many people read us, what sort of people are they and how they read us - you can even read the "sticky" story we've put up for advertisers. But it's actually standard practice: every publication must disclose this kind of information if it wants to be taken seriously by advertisers. TV companies obsess about seconds of attention. Facebook's evasiveness is striking - for whatever reason, it doesn't want us to know.

Now many independent monitors work hard figuring out how web visitors spend their surfing time, and although their estimates differ to Facebook's (Nielsen has always estimated a significantly lower number for time-on-site than Facebook itself) nobody is disputing that Facebook consumes far more minutes than anyone else, and is on an impressive upward trajectory. It would have been nice to hear it from the mouth of Zuck.